Question 1

Which of the following staffing policies is pursued by firms where the lack of managers' mobility among national operations implies that the pay for expatriates should be kept country-specific?

Accepted Answer

National differences in compensation raise a perplexing question for an international business: Should the firm pay executives in different countries according to the prevailing standards in each country, or should it equalize pay on a global basis? For polycentric firms, the lack of managers' mobility among national operations implies that pay can and should be kept country-specific.

Question 2

In terms of expatriate pay, which of the following is true of a foreign service premium?

Accepted Answer

A foreign service premium is extra pay the expatriate receives for working outside his or her country of origin. Many firms pay foreign service premiums as a percentage of base salary, ranging from 10 to 30 percent after tax, with 16 percent being the average premium.

Question 3

Which of the following refers to the extra pay an expatriate receives for working outside his or her country of origin?

Accepted Answer

A foreign service premium is extra pay the expatriate receives for working outside his or her country of origin. It is offered as an inducement to accept foreign postings. It compensates the expatriate for having to live in an unfamiliar country isolated from family and friends, having to deal with a new culture and language, and having to adapt to new work habits and practices.

Question 4

In terms of expatriate pay, which of the following is a characteristic of a foreign service premium?

Accepted Answer

A foreign service premium is extra pay the expatriate receives for working outside his or her country of origin. It compensates the expatriate for having to live in an unfamiliar country isolated from family and friends, having to deal with a new culture and language, and having to adapt to new work habits and practices.

Question 5

Which of the following steps is true of bias in performance evaluations?

Accepted Answer

Several things can reduce bias in the performance appraisal process. First, most expatriates appear to believe more weight should be given to an on-site manager's appraisal than to an off-site manager's appraisal. Due to proximity, an on-site manager is more likely to evaluate the soft variables that are important aspects of an expatriate's performance.

Question 6

Which of the following functions of an international business is typically responsible for international labor relations?

Accepted Answer

The human resource management function of an international business is typically responsible for international labor relations. From a strategic perspective, the key issue in international labor relations is the degree to which organized labor can limit the choices of an international business.

Question 7

In the context of international labor relations, which of the following is a concern of organized labor?

Accepted Answer

Labor unions generally try to get better pay, greater job security, and better working conditions for their members through collective bargaining with management. A concern of organized labor is that an international business will keep highly skilled tasks in its home country and farm out only low-skilled tasks to foreign plants.

Question 8

In the context of international labor relations, which of the following is true of organized labor?

Accepted Answer

A firm's ability to integrate and consolidate its global operations to realize experience curve and location economies can be limited by organized labor, constraining the pursuit of a transnational or global standardization strategy.

Question 9

In the absence of a reciprocal tax treaty, an expatriate:

Accepted Answer

Unless a host country has a reciprocal tax treaty with the expatriate's home country, the expatriate may have to pay income tax to both the home- and host-country governments. When a reciprocal tax treaty is not in force, the firm typically pays the expatriate's income tax in the host country.

Question 10

According to the survey undertaken by Towers Watson, which of the following countries provides the highest pay to CEOs?

Accepted Answer

Differences exist in the compensation of executives at the same level in various countries. The results of a survey undertaken by Towers Watson, for example, suggest that U.S. CEOs earn, on average, roughly double the pay of non-U.S. CEOs.

Question 11

From a strategic perspective, the key issue in international labor relations is:

Accepted Answer

The human resource management function of an international business is typically responsible for international labor relations. From a strategic perspective, the key issue in international labor relations is the degree to which organized labor can limit the choices of an international business.

Question 12

Which of the following allowances is paid when an expatriate is being sent to a difficult location?

Accepted Answer

Four types of allowances are often included in an expatriate's compensation package: hardship, housing, cost of living, and education. A hardship allowance is paid when the expatriate is being sent to a difficult location, usually defined as one where such basic amenities as health care, schools, and retail stores are grossly deficient by the standards of the expatriate's home country.

Question 13

In terms of expatriate pay, what does a firm typically do when a reciprocal tax treaty is not in force?

Accepted Answer

Unless a host country has a reciprocal tax treaty with the expatriate's home country, the expatriate may have to pay income tax to both the home- and host-country governments. When a reciprocal tax treaty is not in force, the firm typically pays the expatriate's income tax in the host country.

Question 14

A principal concern of domestic unions about multinational firms is that a company can counter its bargaining power with:

Accepted Answer

Labor unions generally try to get better pay, greater job security, and better working conditions for their members through collective bargaining with management. A principal concern of domestic unions about multinational firms is that the company can counter its bargaining power with the power to move production to another country.

Question 15

Which of the following staffing policies is pursued by a firm where considerable resentment is caused among foreign nationals who are members of the international cadre and work with U.S. nationals, if pay is not equalized?

Accepted Answer

The problem of compensation is very real in firms with geocentric staffing policies. A geocentric staffing policy is consistent with a transnational strategy. One aspect of this policy is the need for a cadre of international managers that may include many different nationalities. If the firm does not equalize pay, it could cause considerable resentment among foreign nationals who are members of the international cadre and work with U.S. nationals.

Question 16

In the context of expatriate compensation, what is the role of a balance sheet approach?

Accepted Answer

The most common approach to expatriate pay is the balance sheet approach. It equalizes purchasing power across countries so employees can enjoy the same living standard in their foreign posting that they enjoyed at home.

Question 17

Which of the following staffing policies is concerned with the need for a cadre of international managers that may include many different nationalities?

Accepted Answer

The problem of compensation is very real in firms with geocentric staffing policies. A geocentric staffing policy is consistent with a transnational strategy. One aspect of this policy is the need for a cadre of international managers that may include many different nationalities.

Question 18

Which of the following staffing policies is followed by firms that can reduce the issue of compensation to that of how much home-country expatriates should be paid?

Accepted Answer

National differences in compensation raise a perplexing question for an international business: Should the firm pay executives in different countries according to the prevailing standards in each country, or should it equalize pay on a global basis? In ethnocentric firms, the issue can be reduced to that of how much home-country expatriates should be paid.

Question 19

Which of the following is the most common approach to expatriate pay, which equalizes purchasing power across countries so employees can enjoy the same living standard in their foreign posting that they enjoyed at home?

Accepted Answer

The most common approach to expatriate pay is the balance sheet approach. Thisapproach equalizes purchasing power across countries so employees can enjoy the same living standard in their foreign posting that they enjoyed at home. In addition, the approach provides financial incentives to offset qualitative differences between assignment locations.

Question 20

Which of the following staffing policies limits a firm's ability to reduce its use of expatriates?

Accepted Answer

Because of the high cost of expatriates, many firms have reduced their use of expatriates in recent years. However, a firm's ability to reduce its use of expatriates may be limited, particularly if it is pursuing an ethnocentric or geocentric staffing policy.

Quiz 17: Global Human Resource Management